EFFECT OF CREATIVE ACCOUNTING PRACTICES

Abstract

This study's objective is to examine the effect of creative accounting on stakeholders' wealth in Nigeria. Using a questionnaire, primary data was collected from the staff of each firm sampled. The sample size for this study was made up of twenty-five (25) accountants and twenty-five (25) branch managers drawn from the twenty (20) medium companies. According to the findings of the research, factors such as creative accounting, creative accounting practices, method of inventory valuation, frequent changes in depreciation policy may have an impact on stakeholders' wealth in Nigeria. This suggests that the many ways in which creative accounting practices may have a significant influence on stakeholders' wealth. It also demonstrated the impact of accounting policy changes on the wealth of shareholders. All variables had a positive relationship with stakeholders' wealth. However, the relationship was insignificant with respect to frequent changes in depreciation policy and creative accounting practices. The conclusion that can be drawn from the results of the research was that creative accounting practices has a major influence, one that may go in several directions, on the wealth of shareholders in enterprises located in Nigeria. It was recommended that companies should put in place the appropriate internal control systems in order to combat the issue of profit smoothing and other creative accounting methods, which have been the cause of the failure of a number of businesses not only in Nigeria but also in other parts of the world.